GSI rescue group give up the fight

The Gippsland Secured Investments (GSI) rescue group has given up it's attempt to bailout the troubled lender. GSI froze withdrawals in July this year when it found it didn't have the assets to cover the value of its loans and then went into receivership in September.

The rescue group, comprised of Gippsland business leaders, started a multi-million dollar rescue bid to recapitilise the company in order to keep it trading.

The Gippsland financial institution managed $143 million in funds across 3500 accounts.

Difficulty in raising wholesale funds from the banks and in forecasting the retention and conversion of existing notes, were some of the reasons given by the group for its decision.

Members of the rescue group declined to interview requests from the ABC, instead releasing a statement.

"This has been a long and exhaustive process and we have done everything we can, but we believe recapitalising the company carries too much risk for the note holders.

"The situation has not been helped by the regulator, which wants to increase the capital required to operate GSI and other small lenders, giving significant advantage to the major financial institutions," it says.